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Broadband TV to Quickly Rival Broadcast TV

Disney's plans to test free internet distribution of ABC shows like "Desperate Housewives" and "Lost" will help connect the company to the 22 million U.S. homes that regularly stream video, predicts a new report from the Strategy Analytics.

The report says that the fast-growing broadband audience will soon rival that of traditional TV. Over 44 million U.S. households now subscribe to high-speed Internet access from cable and telephone companies. A recent Strategy Analytics survey of broadband homes found that half of all respondents said that they use broadband to stream video of news, sports or entertainment content on a monthly, weekly or even daily basis. In addition to these residential users, millions of consumers could also stream ABC's shows to their PCs at work.

But ABC's plan to offer shows like "Desperate Housewives" and "Lost" over the Internet also strains the company's relationship with key partners and potentially raises technical and usability challenges. Strategy Analytics believes that webcasting will evolve into a valuable secondary platform for Disney and other TV programmers, but that consumers will continue to rely on cable and satellite service providers as their primary source of programming.

"Using a still-developing broadband channel to distribute flagship TV programming carries significant risks for Disney," says James Penhune, Director of the Strategy Analytics Broadband Media and Communications group. "Disney has frequently clashed with cable and satellite companies over licensing fees, and this move increases the potential for further conflict."

The other major issue for ABC is the potential impact of webcasting on its broadcast affiliates, the hundreds of local TV stations which carry the network's programs to most viewers. Unlike rivals such as News Corp.'s FOX network, ABC has not announced specific plans to share webcasting revenues with its broadcast affiliates.

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